“It is important that those litigating in this court are aware of the need for compliance with orders made regarding expert evidence; that so far as possible the costs of such evidence will not be allowed to spiral out of control; and that a party who deliberately chooses for tactical reasons to adduce expert evidence for which in large part no permission has been given should bear the risk.”

“C&S insisted on producing some 29 bundles dealing with individual claims about which Enterprise complains… Only one of these bundles was even opened during the trial and when it was, the reference was extremely brief and added (with respect) nothing at all to any understanding of the case.”

” I…am concerned that a stage may soon be reached, if it has not been already, when the costs of this case will exceed any sum likely to be recovered by either party. What are needed, in my view, are realistic statements by the parties of the likely quantum of their claims, taking account of the outcome of the preliminary issues and the observations made above, including some explanation of the basis on which this quantum is said to be realistic, together with realistic estimates of the likely cost of whatever proposals may be made for the future conduct of the case.”

KEY POINTS

A Part 36 offer may be relevant after the trial of a preliminary issue. The judge was not told the terms of the offer and would not determine the general costs of the preliminary issue.

However there were certain issues in relation to the conduct of the trial which did warrant specific orders in relation to costs.

An expert report on behalf of the claimant had been unnecessary and inadmissible. The claimant was to pay 100% of the costs of that report in any event.

29 of the bundles were unnecessary. The claimant was to bear 80% of the costs of preparing the bundles in any event.

Future case management involved the parties knowing precisely how much was at stake and the costs involved in future litigation. Further directions would be made when that information was available.

THE CASE

There had been a trial of preliminary issues and the court was determining the issue of costs.

THE RELEVANCE OF A PART 36 OFFER

The claimant had made a Part 36 offer. The judge was not told of the terms of the offer. However the defendant contended it had effectively “won”

“It seems to me that the terms of any Part 36 offer may potentially have a bearing on the question of what order for costs should be made and I therefore reserve the costs of the preliminary issues subject to two provisoes mentioned below”

THE COSTS OF AN EXPERT REPORT

The claimant had adduced evidence from an expert, in the event large parts of that report were redacted for the trial of the preliminary issue.

The first of these provisoes is necessary because, as recorded at [25] of my judgment, Mr Lewis included a lengthy section in his report which analysed and expressed his views about the merits of the allegations made by Enterprise. No permission had been given for such evidence, while the order for trial of the preliminary issues provided expressly that Enterprise was not required to prove its allegations of defective performance by C&S and these issues would not be determined. The inclusion of this material in Mr Lewis’s report was a deliberate decision, either by C&S itself or by those acting for it. Mr Lewis’s evidence was that he included this section of his report because he was instructed to do so by C&S’s solicitors, Sidley Austin. It more than doubled the length of the report and increased unnecessarily the costs of the preliminary issues.

In written submissions Ms Clara Benn for C&S rightly accepts that the passages which I required to be redacted were inadmissible but submits that any proviso ought to be confined to the costs of the redacted passages; that the redacted passages are likely to become relevant in the next phase of the litigation so that ultimately no costs will have been wasted; and, in any event, that the costs of preparing the redacted passages should be reserved.

The judge rejected the argument that the contents of the report may be necessary for the second stage of the trial

It is not at all obvious that the redacted passages from the report will form part of the next phase of the litigation but, in any event, it is necessary in my judgment to mark the disapproval by the court of the course taken by C&S and, moreover, to do so now rather than waiting until the end of this litigation. It is important that those litigating in this court are aware of the need for compliance with orders made regarding expert evidence; that so far as possible the costs of such evidence will not be allowed to spiral out of control; and that a party who deliberately chooses for tactical reasons to adduce expert evidence for which in large part no permission has been given should bear the risk.

BUNDLES

The second proviso, concerning preparation of the trial bundles, is necessary because C&S insisted on producing some 29 bundles dealing with individual claims about which Enterprise complains. These were bundles containing documents relating to the claims addressed in Mr Lewis’s report. Only one of these bundles was even opened during the trial and when it was, the reference was extremely brief and added (with respect) nothing at all to any understanding of the case. It is true that disclosure of the documents contained in these bundles had been ordered, but it does not follow that it was reasonable, let alone necessary, for these to be included in the trial bundles. Inevitably this also increased the costs of the preliminary issues.

The judge ordered that the claimant pay 80% of the costs of preparing the bundles in any event.

FUTURE CASE MANAGEMENT, PROPORTIONALITY AND ADR

The future conduct of the case

The second issue on which I am asked to rule concerns the future conduct of the case. C&S submits that a procedure should be determined now for a representative sample of the 11,995 claims handled by it during the currency of the contract to be tried, including 449 claims which had been audited by Ozon before the contract was terminated which include the 29 claims addressed in Enterprise’s pleading and in Mr Lewis’s report. It envisages, therefore, that a procedure should be established now which will commit the parties and the court to a determination of liability in respect of tens and possibly hundreds of such claims.

Enterprise submits that such an application is premature, and that further thought needs to be given to the future conduct of the case, so that a case management hearing should be held after there has been time to formulate and discuss considered proposals for the efficient and most effective means of disposing of the dispute.

I am not persuaded by C&S’s proposals and am concerned that a stage may soon be reached, if it has not been already, when the costs of this case will exceed any sum likely to be recovered by either party. What are needed, in my view, are realistic statements by the parties of the likely quantum of their claims, taking account of the outcome of the preliminary issues and the observations made above, including some explanation of the basis on which this quantum is said to be realistic, together with realistic estimates of the likely cost of whatever proposals may be made for the future conduct of the case. A case management hearing should now be fixed, but there must be a constructive discussion between the parties well before the date of that hearing and the parties must attend the hearing armed with this information.

That should enable the court to give directions for the further conduct of this case, including (depending on what is actually at stake) whether it should remain in the Commercial Court. Alternatively, the parties may decide that it is strongly in their interests to consider ADR, in which case the case management hearing may be deferred while that option is explored.